Tuesday, June 17, 2008

Banking institutions are facing a perception dilemma with about 75 per cent of UAE consumers thinking all banks in the country offer the same services.

David Bennett, head of brand strategy at Emirates NBD, citing a study by AC Nielsen, a New York City-headquartered global marketing research firm, said that this is alarming as people can no longer distinguish which perform better.

He said one of the reasons is the "not yet matured" strategy of branding and advertising firms in the region but added that the situation is not unique in the GCC as it is also the same scenario in other emerging markets.

"Branding a bank is a bit difficult as people would not necessarily come to a bank if they have other means to secure their finances. But if we can make people feel good when they go to the bank, then that's excellent branding," he told the recent Branding in Banking and Finance Forum.

And in an exclusive interview with Emirates Business, Bennett said another challenge in the region is the fact that the banking sector is largely fragmented, with more than 50 players in the market.

"The market is not yet in its matured stage and it has a long way to go. The standard of advertising leaves a lot to be desired. "The market here is very product driven and there is a great need to become more customer-focused," Bennett said. "There is also a big difference between bank selling and customer buying. There has been very few organisations in this region that have managed to put their brands close enough to the consumers to the extent of having an emotional link to their customers. There are very few consumers that do business with a bank because it feels good to do business with it," he added.

In addition to poor branding strategies, the customer's lack of trust in the bank is also placing a big hurdle in the way of banks' productivity growth.

According to research carried out by technology firm Unisys, three-quarters of people do not trust their bank. The report has revealed that many people are unhappy with the levels of service that they are offered. While one of the major issues creating a lack of trust has been the high penalty charges that have been levied by banks on credit cards and overdrafts, the research also shows a more general feeling of a lack of confidence in banks.

In a local survey conducted in the last quarter of last year, Dubai residents have complained banks in the emirate are inefficient and out of date, with customer services failing to hit the mark at both local and international establishments. A cross-section of customers interviewed revealed dissatisfaction with lack of staff knowledge, misinformation, time taken to complete transactions and lack of accessible branches. Black marks were also given for the lack of real-time transactions and hidden service costs. The lack of trust has led to lower loyalty levels.

"Loyalty" nowadays has become product-driven as seen in the proliferation of loyalty cards instead of cultivating deep emotional and relation-based loyalty.According to Nielsen's global report on Banking Services and Loyalty, 68 per cent claim to be very or slightly loyal to their main bank, with 59 per cent of Canadians the most loyal of all, followed by over half of Czechs, Danes and the French.

Least loyal to their banks by a long way are the Japanese, with 29 per cent claiming not to have any loyalty to their bank, compared to a global average of six per cent. Nearly 10 per cent of Australian banking customers are unhappy enough with their bank's products and services to consider switching within the next 12 months, while a further 30 per cent said they had experienced service difficulties, of which only half were resolved satisfactorily.

The report also found that of those respondents who had experienced service difficulties with their bank, close to 20 per cent indicated that they would switch in the next six months. Moreover, overall satisfaction scores amongst these respondents dropped from the average of 64 per cent to just 39 per cent as of last year.

The survey, which covered 46 markets from Europe, Middle East, Asia Pacific, North America, also found out that despite the increasing use of internet banking, there is still a high rate of customers visiting the branches. A global average of 14 per cent claim never to visit a branch, and one third claim to visit less than once a month.

However, whether online or physical transaction, customers are still demanding high quality services. One way for financial institutions to begin rebuilding confidence and regaining the trust of their customers is to demonstrate that they are capable of providing a safe place for people to put their money, where it will not fall victim to identity fraud scams, Unisys said.

"To do this, banks need to ensure that they have a high level of identity authentication standards so as to make it more difficult for fraudsters to obtain access to consumers' bank accounts," it added. According to Pier Massa, founder and managing partner of Canada-based M-2 Business Frameworks, banks first of all need to establish a very strong trust relationship with their clients if they want to be successful.

"Banks are unique because the services they deliver generally do not have a tangible physical product so it is more related to trust. "Just like in health care, the clients' or patients' trust in the doctor or in the hospital is deeply needed," he said.

Massa added that the banking sector in the region is relatively new to the idea of branding.

"So most of the strategies here are very reactive," he said.

"Almost all of the banks in this area are competing with one another on offers. Honestly, I haven't seen anything that has struck me as yet."

But branding should not be mistaken as only a mere marketing gimmick. He said branding is the summation of all businesses operations, which if run altogether as planned, will increase customers' trust.

And improving employees' behavior should be on the top list, he said, adding that to improve their performance, the employees needs should be the first to be catered to.

"Employees' satisfaction has a direct correlation to customers' satisfaction and ultimately in the profitability of a company or an organisation. This is critical," he said.

"Whatever promise we have for our consumers, we have to over-deliver to our employees. If we promise respect to our customers then we cannot treat our employees with anything but respect because what we do to them is what they will ultimately do to our clients."

A number of studies have documented that a bank's performance and the customers loyalty towards it have been dependent on how its staff behaves.

According to a US banking sector study by Parkington and Buxton, 68 per cent of customers leave because of poor employee attitude while another study by MCA Brand Ambassador Benchmark noted that 41 per cent of customers are loyal because of a good employee attitude.

A study by Ken Irons, similarly stated that 70 per cent of customer brand perception is determined by experiences with people.

To establish loyalty, the CEOs should be the leaders of the brand and not anyone else, Aubrey Ghose, AIS Brandlab founder and chief executive, said.

"If somebody is selling his business, he is not selling the individual asset, he is selling the brand," he said. "So investing in branding is really important, and the key thing here is that branding isn't one thing that you can spend it on, branding is how your HR behave, how well your communications and marketing performed, how is your IT strategy, you know, branding is all of that. "It's not just one thing that you can spend money and say lets' spend on branding. Branding is about changing the culture of the business, and driving it forward in a way that it makes a difference to people's lives," he said.

Massa added: "Companies need to be educated that the value of branding is in the hands of the executive team. This is something that the marketers are not good at.

71% consider mobile unsafe

The mobile phone is practically universal, with more than 3.3 billion subscribers worldwide, yet 71 per cent of all consumers surveyed in a number of countries do not consider using a mobile device to bank or shop online, a new study has found.

The study by Unisys Corporation conducted with the latest installment of the Unisys Security Index, also reveals that more than half of all respondents (59 per cent) do not trust their mobile devices to provide a secure transaction. Moreover, only nine per cent currently use these devices to conduct transactions involving credit-card payments, money transfers and deposits.

Unisys surveyed 13,296 consumers worldwide in March 2008 about their mobile-device habits and how secure they feel when conducting online transactions. The results indicate a widespread apprehension about the security of mobile devices and their ability to protect pertinent information relayed in a financial transaction.

Other key findings of the survey include:- The consumers most reluctant to use a mobile device to bank or shop online were in France (86 per cent), UK (79 per cent), Australia (78 per cent), Belgium and Italy (both at 77 per cent) and the United States (71 per cent).- Twenty one per cent of German respondents currently use a mobile phone or personal organiser to conduct financial transactions, representing the highest percentage of any country or region included in the survey.

United Kingdom respondents have the lowest percentage of consumers using mobile devices to bank or shop (one per cent).

- At least half of all respondents in each country or region – with the exception of New Zealand (45 per cent) and Malaysia (49 per cent)

– do not trust their mobile devices to provide a secure transaction.

- Most consumers generally perceive banks as having the best security for mobile transactions when compared to telecom providers and online retailers. However, trust of banks vary greatly from country to country.

For example, Italian respondents are twice as likely (72 per cent) to trust a bank to secure an online transaction via a mobile device as respondents in Malaysia (38 per cent).

Tim Kelleher, vice president of enterprise security at Unisys said: "Despite unprecedented growth in the number of cell phone users and the advancement of mobile technologies, telecom providers, online retailers, and financial institutions seem unable to convince consumers worldwide that a secure platform exists for conducting online mobile transactions.

"There is a great deal of money to be made in mobile payments, but only when consumers believe that the security of the transaction meets or exceeds the freedom of using mobile devices."

By the end of this year, the UAE will be home to two institutions which will both be hoping to become globally significant.

Noor Islamic Bank launched in January with ambitions to become the world's largest Shariah compliant bank, while Abu Dhabi's Al Hilal Bank will launch with a slightly larger capital base.

Both of these financial institutions will be looking to achieve most of their growth outside the domestic market - with around 50 banks in operation, the UAE is not quite over-banked, but there is little room for the kind of growth these giants want.

Instead, they will be looking to expand in other regions with a large Muslim population, such as Malaysia, Indonesia, and parts of Europe and Africa.

The trend is not limited to pure-play Islamic banks: Abu Dhabi Commercial Bank and National Bank of Abu Dhabi, two of the UAE's largest lenders, have both expressed intentions to look East for future growth. ADCB has acquired a 25% stake in RHB Capital, Malaysia's fourth largest bank, which will provide it a foothold as it seeks to build its presence in the country.

Asia seems particularly receptive to Middle East banks, since it is experiencing a similar rate of growth to the Gulf and Islamic finance has a proven success rate there.

Of course, the ultimate prize is China, which is poised to overtake the US as the world's largest economy. The market is still far from open, but Western institutions have made attempts to enter - HSBC has a joint venture with Bank of Communications, and Bank of America recently raised its stake in China Construction Bank.

If banks in the Middle East have serious intentions of becoming more than just regional players, they need to have a strategy to harness growth in the Far East. The opportunities are too great to be ignored.On a personal note, this hack will also be heading East, but will continue to monitor developments in the Middle East banking market with interest.

A young student living in the UAE recently presented me with a quandary. Her parents were born in the US, she was born and raised for some time in Brazil. Then her father uprooted the family again and they have lived in three different countries, before coming to Dubai.Where do I belong, she asked me.I knew immediately that this would be an extremely difficult question to answer.When I said, "Home is where the heart is", I also knew instinctively my glib answer would prompt her to question me further. And she did."I don’t feel American", she said. "I speak the lingo and follow the trends because of television and my parents, but when I am there I don’t belong."My best years were spent in Brazil", she added, "but because I was sent to an international school and English was spoken at home I did not speak Portuguese and I did not belong. And now in Dubai, communicating in English is really easy, but I still don’t belong."Her lament got me thinking. Now that the world has become multi-layered because of immigration and globalisation, are we all going to be faced with a similar quandary just like this beautiful well-spoken young woman who knows a lot about a lot of things, but does not know where she belongs?I certainly don’t have a definitive answer, but I do know that a sense of belonging enriches us humans as much as water enriches the earth.So how does one really know one belongs? What’s most important – your birthplace, your ethnicity, your language, your religion, your education, your career?Looking for answers I came upon the website of Britain’s Social Issues Research Centre (www.sirc.org/publik/belonging). There’s a whole 46-page study there and it’s a must-read if you too wonder about your sense of belonging.Immigration has impacted almost every country in the world. While many celebrate the ethnically diverse family, there are many who don’t. Some have woven diversity into a rich tapestry and some have not. Some have used inclusion to create a sense of belonging and others have remained exclusive.That’s the way the world turns – sometimes we have to accept that we don’t belong.

It is hard to believe a neon sign could have me so transfixed, but it does, the one hanging above the Light Corner store at Muroor and Al Falah streets.

On one side, two players kick a ball between them on an endless arc. On the corner, a monkey plays a set of drums. Beside him, a bird flaps his wings. I cannot make out the last vignette, but it appears to have something to do with a horse’s head.

I could stare at this scene for many minutes. It is a bizarre and hilarious landmark, lit to the hilt. When I pass by it at night, it always makes me smile.

But under a new Government initiative to beautify the city, I imagine this sign’s days – not to mention countless others – are numbered.

Abu Dhabi is attempting to improve on much that has happened here in the last 30 years through its City Management Office (CIM), pegging London and Singapore as worthy benchmarks. While the office is expected to come out with a complete list next year, it has already released a streamlined version featuring 109 offences.

Some of the CIM’s initiatives make absolute sense: livestock should not be raised and killed within city limits. Medical waste should be disposed of safely. Littering, spitting and urinating in public – not called for. But in a region which has been criticised for its outsize carbon footprint, what sense does it make to levy fines for hanging laundry out to dry just because of how it looks?

And if municipal planners have their way, local shopkeepers will have to tear down their colourful neon signs and replace them with something more pleasing to the eye.

Estimates suggest three years from now, 70 per cent of the city’s signs will be gone.

No more monkey? No more horse’s head? Not to mention the extravaganzas announcing Mister Baker Celebration Cakes, or the Lebanese Flower, or countless others that jazz up the city at night?

It calls to mind the expatriate drivers of the capital’s newer silver taxis: unlike some of their counterparts in the gold and white versions, they sport beards which are neatly trimmed, wear neat uniforms replacing their traditional dress and sit in car interiors void of flamboyant personal touches and decorations.

The result is pleasant. And dull.

One can only imagine how Abu Dhabi will look when the CIM’s work is done. I can’t help but worry that it might not appear entirely real, especially if aesthetics normally left up to individual proprietors are so micromanaged.

My fear is that the great minds mapping out the city’s future will spend so much time planning the way the capital is going to be, they will wallpaper over what it has become. The aim is to beautify; the effect could be to make it soulless.

Sure, London and Singapore are world standards. So are Paris, New York and Montreal. But all these cities – and other great hubs in the world – have one major thing in common with Abu Dhabi as it is right now, and that is peculiarities that make them their own.

Tourists flock to Times Square in New York City because it is a festival of garish neon. In Delhi, cars veer to avoid hitting cows as they placidly make their way across traffic-choked roundabouts in the downtown core. And in Ottawa, Canada’s capital, the Homeless Poet lives on a street corner in a high-tourist area, scruffy and unwashed, quietly offering his thoughtful writing on pieces of cardboard for handouts from passersby.

These are the things, though hardly beautiful, that make one both smile and remember a place. They are the ways a person learns about a culture, they are what one writes home about.

There is no harm in wanting to burnish an image; world commerce would probably grind to a halt if people stopped caring about how they appear to others. And Abu Dhabi most definitely needs a master plan to cope with growth.

But all one has to do is think of an over-airbrushed celebrity photograph, or the unlined face of a woman who has had a little too much plastic surgery, to get that a few blights and irregularities are necessary, even in a world where we have the means to eliminate them almost entirely.

A trip to any modern shopping mall in the world proves that, while the shops may be uniform, the aesthetics beyond reproach, they will never tell us very much about the people inside. It was Desmond Morris, the British artist and author, who said: “The city is not a concrete jungle, it is a human zoo.”

Just like a neon sign, a city should be lit from within. It should have character. These are things Abu Dhabi has achieved, even in its very short history. And that is something no government department can plan for.